Presented below are a number of balance sheet items for Sarasota, Inc. for the current year, 2020.

Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of debt investments (trading) are the same. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment.)

Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate

that it will enable them to earn an additional $600,000 after tax. What would be the impact on

earnings per share if the raise the $1,000,000 by:

a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share

     can be coverted into 10 shares of Peyton common stock?

b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into?

     5 shares of Peyton common stock?

c) $500,000 of each of the above?

Presented below are the balance sheets of Trout Corporation as of December 31, Year 1 and Year 2, and the income statement for the year ended December 31, Year 2. The statement of retained earnings for the year ended December 31, Year 2 is on the next page. All dollars are in thousands.

Trout Corporation Balance Sheets December 31, Year 1 and Year 2 Assets Year 1 Year 2 Cash $ 85 $ 127 Accounts receivable 245 253 Less: Allowance for doubtful accounts (9) (11) Prepaid insurance 15 9 Inventory 225 234 Long-term investment 65 42 Land 160 160 Buildings and equipment 250 300 Less: Accumulated depreciation (75) (100) Trademark 25 22 Total Assets $ 986 $1,036 Liabilities & Stockholders’ Equity Accounts payable $ 50 $ 36 Salaries payable 9 6 Deferred tax liability 15 18 Lease liability -- 75 Bonds Payable 275 125 Less: Discount (26) (24) Common Stock 250 280 Paid-In Capital –in excess of par 75 105 Preferred Stock - 70 Retained Earnings 338 345 Total Liabilities & Stockholders’ Equity $ 986 $ 1,036 Trout Corporation Income Statement For the Year Ended December 31, Year 2 Net sales revenue $ 380 Investment revenue 12 Operating Expenses: Cost of Goods $ 150 Salaries expense 58 Depreciation expense 35 Trademark amortization 3 Bad debts expense 8 Insurance expense 20 Bond interest expense 45 319 Operating Income $ 73 Other Income (Expense): Loss on building fir $(27) Gain on sale of investments 4 (23) Pre-Tax Income from Continuing Operations $ 50 Less: Income Tax Expense: 25 Net Income $ 25 Additional Information: 1. Shareholders were paid cash dividends of $18 million. 2. A building that originally cost $40 million, and which was one-fourth depreciated, was destroyed by fire. Some undamaged parts were sold for $3 million. 3. Investment revenue includes Trout Corporation's $7 million share of the net income of Bass Corporation, an equity method investee. 4. $30 million par value of common stock was sold for $60 million, and $70 million of preferred stock was sold at par. 5. A long-term investment in bonds, originally purchased for $30 million, was sold for $34 million. 6. Pretax accounting income exceeded taxable income causing the deferred income tax liability to increase by $3 million. 7. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $90 million. Annual lease payments of $15 million are paid at January 1st of each year starting in Year 2. 8. $150 million of bonds were retired at maturity.

Required: Use the EXCEL worksheet template provided. There are three tabs- 1. Direct Method Statement of Cash Flows (SCF) 2. Spreadsheet for preparing the SCFs. This is where you show your work 3. Cash flows from Operating Activities – CFOs Indirect Method A. In the tab labeled Direct Method SCFs,

Prepare a statement of cash flows for Trout Corporation using the direct method of reporting cash flows from operating activities for the year ended December 31, Year 2. Show your work in the second tab labeled Spreadsheet for SCFs. You can use either the spreadsheet method, t-account method, or a combination of both. Included are some t-accounts to help you. For both the direct and indirect method you will need to analyze the impact the Allowance for doubtful accounts has on accounts receivable and cash. B. In the third tab, prepare the operating activities section only for the statement of cash flows for Trout Corporation using the indirect method for the year ended December 31, Year

A recent 10-year study conducted by a research team at the Medical School was conducted to assess how age, blood pressure, and smoking relate to the risk of strokes. Assume that the following data are from a portion of this study. Risk is interpreted as the probability (times 100) that the patient will have a stroke over the next 10-year period. For the smoking variable, define a dummy variable with 1 indicating a smoker and 0 indicating a nonsmoker.

Risk Age Blood Pressure Smoker

12 57 150 No

26 60 165 No

11 59 155 No

57 86 170 Yes

28 59 196 Yes

50 76 189 Yes

17 56 155 Yes

32 78 120 No

37 80 135 No

15 78 98 No

22 71 152 No

36 70 173 Yes

15 67 135 Yes

48 77 209 Yes

14 60 199 No

36 82 119 Yes

8 65 166 No

34 82 125 No

3 61 117 No

39 60 208 Yes

(a) Develop an estimated multiple regression equation that relates risk of a stroke to the person's age, blood pressure, and whether the person is a smoker. Let x1 represent the person's age. Let x2 represent the person's blood pressure. Let x3 represent whether the person is a smoker. If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)

=______ +_________ x1 + ________x2 + ________x3

(c) What is the probability of a stroke over the next 10 years for Art Speen, a 68-year-old smoker who has a blood pressure of 173? If required, round your answer to two decimal places.

_____________

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $455,000; Allowance for Doubtful Accounts has a credit balance of $4,000; and sales for the year total $2,050,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $19,600.

a. Determine the amount of the adjusting entry for uncollectible accounts.
$

b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

c. Determine the net realizable value of accounts receivable.
$

Note Receivable

Quick Tire and Lube received a 120-day, 9% note for $84,000, dated April 9, from a customer on account. Assume 360 days in a year.

a. Determine the due date of the note.

b. Determine the maturity value of the note.
$

c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank.

Providing for Doubtful Accounts

At the end of the current year, the accounts receivable account has a debit balance of $1,147,000 and sales for the year total $13,000,000.

The allowance account before adjustment has a credit balance of $15,500. Bad debt expense is estimated at 3/4 of 1% of sales.

The allowance account before adjustment has a credit balance of $15,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $49,600.

The allowance account before adjustment has a debit balance of $5,700. Bad debt expense is estimated at 1/4 of 1% of sales.

The allowance account before adjustment has a debit balance of $5,700. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,300.

Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions (a through d) listed above.

The statement of financial position of a company at year ended 31st December 2000 reflects the following status:
Amount (Rs.)
Plant under installation 2000,000
Other assets 8000,000
10,000,000
Loans
Bank Loan 18% 2,000,000
Bank Loan 20% 2,500,000
Bank Loan 22% 1,500,000
6,000,000
Shareholder’s Equity 4,000,000
             10,000,000

Bank loan of 20% was taken on April 1, 2000. Other loans were brought forward from 1999.
Expenditures incurred on plant under installation:
April 01, 2000 1,000,000
June 01, 2000 700,000
September 01, 2000 300,000
2,000,000

Required: Calculate borrowing cost and total capitalized cost of asset at 2000.

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $94 per unit, and variable expenses are $64 per unit. Fixed expenses are $835,500 per year. The present annual sales volume (at the $94 selling price) is 26,000 units. Required: 1. What is the present yearly operating income or loss? 2. What is the present break-even point in unit sales and in dollar sales? 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? 4-a. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)? 4-b. Not available in Connect.

EcoSacks manufactures cloth shopping bags. The controller is preparing a budget for the coming year and asks for your assistance. The following costs and other data apply to bag production.

You learn that equipment costs and building occupancy are fixed and are based on a normal production of 600,000 units per year. Other overhead costs are variable. Plant capacity is sufficient to produce 750,000 units per year.

Labor costs per hour are not expected to change during the year. However, the cotton supplier has informed EcoSacks that it will impose a 20 percent price increase at the start of the coming budget period. No other costs are expected to change.

During the coming budget period, EcoSacks expects to sell 540,000 bags. Finished goods inventory is targeted to increase from the current balance of 120,000 units to 210,000 units to prepare for an expected sales increase the year after next as a result of legislation in several states regarding plastic bags. Production will occur evenly throughout the year. Inventory levels for cotton and canvas are expected to remain unchanged throughout the year. There is no work-in-process inventory.

Required:

a. Prepare a production budget for the coming year.

b. Estimate the materials, labor, and overhead costs for the coming year.

A corporation decides to issue 15-year bonds in the amount of $10,000,000. Interest payments will be made at the rate of 10% compounded semi-annually. The bonds were priced to yield 8% compounded semi-annually to maturity. What is the price of the bonds?

a. $8,462,755 b. $10,000,000 c. $3,083.187 d. $11,729,203